Managerial Accounting: E7-2B Kunkel Company makes two products

Managerial Accounting 
E7-2B Activity-based costing product costs for external reports 
Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: 
Mercon Wurcon 
Direct materials cost per unit 13.60 21.40 
Direct labor cost per unit 6.90 3.60 
Direct labor-hours per unit 0.47 0.28 
Number of units produced 10,000 87,000 

These products are customized to some degree for specific customers. 

Required: 
1. The company's manufacturing overhead costs for the year are expected to be $680,004. Using the company's conventional costing system, compute the unit product costs for the two products. (Do not round intermediate calculation. Round your final answers to 2 decimal places.) 
2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year: 
Mercon Wurcon Total 
Engineering design time (in hours) 2,100 3,000 5,100 
Compute the unit product costs for the two products using the proposed ABC system. (Round your final answers to 2 decimal places.)
Powered by